INTRODUCTIONThe literary meaning of the word inventory is

stock of goods.Every enterprise needs inventory for smooth

running of its activitiesIt serves as a link between production and

distribution processes.The unforeseen fluctuations in demand and

supply of goods necessitate the need for inventory.

The investment in inventories constitutes the most significant part of current assets in most of the undertakings. Thus it is very essential to have proper control and mgt of inventory.

The purpose of inventory mgt is to ensure availability of materials in sufficient qty as and when required and also minimise investment in inventories.

TYPES OF INVENTORIESRAW MATERIALSWORK IN PROGRESSFINISHED GOODS

PURPOSE OF HOLDING INVENTORIESTransaction motive: which facilitates

continuous production and timely execution of sales orders.

Precautionary motive: for meeting unpredictable changes in demand and supply of materials

Speculative motive: for taking advantage of price fluctuations , saving in re-ordering costs and qty discounts etc

MAIN OBJECTIVES ARE AS FOLLOWS

To ensure continous supply of materials,spares and finished goods.

To avoid both over-stocking and under-stocking of inventory.

To maintain investments in inventroies at the optimum level as required by the operational and sales activitites.

To keep material cost under control.To minimise losses through

deterioration,pilferage,wasteages and damages.

Risk and cost associated with inventories1. Price Decline2. Product deterioration3. Obsolescence

TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENTDetermination of stock levels.Determination of safety stocks.Determination of Economic Order

Quantity.ABC analysis.VED analysis.Inventory turn over ratios.Age schedule of inventories.Just in time (JIT) inventory system